This article highlights a few key Accounting Standards Codification (ASC) Topic 740, Income Taxes, tax matters that we have seen numerous companies miss or overlook in tax provisions in recent years, including:
- Intraperiod tax allocation rules.
- Hanging credits for indefinite-lived intangibles amid valuation allowance positions.
- Jurisdictional netting of deferred tax assets and deferred tax liabilities.
- Improper disclosure of tax attributes and carryforwards.
- Failure to consider the alternative minimum tax (AMT) when using net operating loss (NOL) carryovers.
- Improper recognition or derecognition of uncertain tax positions under FASB Interpretation (FIN) No. 48, Accounting for Uncertainty in Income Taxes, which is now mostly incorporated into ASC Subtopic 740-10.
- Improper disclosure of Accounting Principles Board (APB) Opinion No. 23, Accounting for Income Taxes—Special Areas, positions for indefinite reinvestment of foreign earnings
- Failure to calculate outside basis difference for nonconsolidated entities, including foreign entities and domestic partnerships